Matz: Proposed stress tests ‘extremely important’
by. Nicholas Ballasy
NCUA Board Chairman Debbie Matz told Credit Union Times there is no reason why a credit union with assets of $10 billion or more should not be subject to the stress testing rule that other financial institutions are required to follow under the Dodd-Frank Act.
“Our share insurance fund is $11.7 billion, so there are four credit unions with assets over $10 billion. Three of those four are larger than our share insurance fund,” Matz said in an interview following the NCUA board meeting on Thursday.
“So it’s a very significant risk to the fund and there’s no reason why a credit union of $10 billion or more should not be held to the same standard in terms of forward-looking testing that other financial institutions are held to,” she added.
The NCUA’s proposed rule would require capital planning and stress testing for credit unions with $10 billion of more in assets. Matz said the rule is essential to the protection of the NCUSIF.
“If credit unions don’t have sufficient capital, then they will not be able to absorb losses and if they are in a vulnerable situation, they won’t be able to survive,” Matz said. “So if a credit union of that size fails it will have a dramatic effect on the share insurance fund and on the entire credit union industry.”continue reading »